Bank Accounts in India — The Complete Guide

Banks market dozens of variants, but almost all of them are versions of five underlying account types. The differences that matter are: can you earn interest, how many transactions are free, and what balance you must maintain.

Since 2010, RBI requires banks to compute savings interest on the daily closing balance, not the old month-minimum method. Interest accrues daily and is typically credited quarterly.

A worked example

You keep an average daily balance of ₹1,00,000 in a savings account paying 3% p.a. Daily interest = ₹1,00,000 × 3% ÷ 365 ≈ ₹8.22. Over a quarter (about 91 days) that's roughly ₹748, credited to your account. In a bank paying 6% on the same balance, you'd earn about ₹1,496 for the same quarter — double, for exactly the same effort.

Tax note: savings interest up to ₹10,000 a year is deductible under Section 80TTA (old regime), and up to ₹50,000 for senior citizens under 80TTB. FD interest gets no such shelter and is taxed at your slab, with TDS once bank interest crosses ₹50,000 in a year (₹1,00,000 for seniors).

Most people never read the schedule of charges. These are the line items that actually show up on statements.

Deposits with Indian banks are insured by the DICGC (a wholly-owned RBI subsidiary) up to ₹5,00,000 per depositor, per bank — covering principal plus interest together. The cover applies to savings, current, fixed and recurring deposits combined.

• •The limit is per bank, not per account: three accounts in the same bank share one ₹5 lakh cover.
• •Different banks each carry their own ₹5 lakh cover — which is the real argument for a second bank.
• •Different ownership capacities count separately: your sole account and a joint account where you are the first holder are treated as different depositors.
• •Cooperative banks are covered too — this matters, because they are where most depositor failures have happened.
• •Since 2021, DICGC must pay interim claims within 90 days of a bank being put under moratorium.

Two pieces of paperwork prevent the vast majority of banking headaches: staying KYC-current, and having a nominee on record.

Periodic re-KYC

Banks must refresh customer records — every 2 years for high-risk customers, 8 years for medium risk and 10 years for low risk. Miss it and the account is frozen for debits, usually at the worst possible moment. If your address, phone or PAN details change, update them at the branch or through the app immediately.

Nomination

A nominee lets the bank release the balance without a succession certificate. Under the amended Banking Laws (2025), depositors may register up to four nominees — either successively (an order of priority) or simultaneously (with declared percentage shares). A nominee is a receiver, not an owner: the money still devolves per your will or succession law, but it reaches the family in weeks instead of years.

RBI's rules on unauthorised electronic transactions are strongly in the customer's favour — provided you report fast. This is the single most valuable thing to know about your bank account.

1. 1Enable SMS and email alerts on every transaction — this is what starts the clock.
2. 2The moment you see an unknown debit, call the bank's fraud helpline and get a complaint reference number in writing.
3. 3Report to the national cybercrime helpline 1930 or cybercrime.gov.in the same day; fast reporting can freeze funds mid-transfer.
4. 4Follow up with a written complaint. If the bank doesn't resolve it in 30 days, escalate free of cost to the RBI Ombudsman at cms.rbi.org.in.

• •Interest rate: small finance banks often pay 6–7.5% on savings versus 2.7–3% at large private banks. They are DICGC-insured too — just keep the balance within ₹5 lakh.
• •App and outage record: you will use the app daily. A bank with a good app and stable UPI beats one with a marginally higher rate.
• •Branch and ATM access: matters most for cash-heavy usage, senior parents and locker facilities.
• •Charges schedule: check minimum balance, debit-card fee and free-transaction limits before opening, not after.
• •Service quality: how quickly the bank answers a disputed transaction is worth more than 0.5% of extra interest.

To close an account, first move away every standing instruction, SIP mandate, EMI auto-debit and salary credit; then submit the closure form with unused cheques and the debit card. Closure within 14 days of opening, or after 12 months, is generally free — closing between those windows can attract a fee.